Costa Rica to end rice subsidy in 2014, relieving trade friction

Costa Rica has told the World Trade Organization (WTO) it will end rice subsidies from March 1, 2014, removing an irritant in agricultural trade relations with the United States and other WTO member countries.

In a filing published on the WTO's website on Wednesday, Costa Rica said price support for rice would be eliminated by an executive decree issued last month.

The subsidy had been a staple of agricultural discussions at the WTO for years, and is due to be raised at the next committee meeting on June 13, because other rice producers say Costa Rica has repeatedly broken WTO rules with illegal subsidies.

The United States said earlier this year that Costa Rica had broken its allowed subsidy limit for five years, paying farmers $312 million more than it was allowed to. Australia, Japan, Pakistan and Canada had also complained about the subsidies.

Costa Rica had previously said it intended to scrap the subsidies, but a 2010 court ruling enforced a minimum price of about $600 per tonne from the beginning of 2011. A later ruling, in July 2012, said the price must remain until the Economy Ministry had laid down new rules for the country's rice market.

Costa Rica had repeatedly told the WTO that it was working on the new policy but first needed to help small farmers improve their competitiveness, and could not say when the subsidy would end.